For company and business names there is a well established principle of "passing off". Two businesses can have the same, or very similar names, provided that they are not operating in the same area, in similar industries and that there is not likely to be confusion by customers over which company is which. So if your business is called "John Doe" and your competitor is also called "John Doe", you are both in the same business and both going after the same customers they would have a case to challenge you under "passing off".
Broadly speaking the same passing off rules also apply to domain names. So if you have two websites with similar names in the same industry they could challenge you in court for "passing off". If you want to read up on the case law there is a good summary on the nominet site - http://www.nominet.org.uk/disputes/caselaw/trademarks/
So basically the owner of the other firm has a right to use his domain name and to try and stop anyone else from using it.------------------------www.thecompanywarehouse.co.uk